Guz v. Bechtel National, Inc.
8 P.3d 1089, 100 Cal. Rptr. 2d 352, 24 Cal. 4th 317 (2000)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The implied covenant of good faith and fair dealing cannot add substantive terms to an employment contract, and an implied-in-fact contract limiting termination is defined by specific written policies, not by an employee's longevity and positive reviews alone. To defeat summary judgment on an age discrimination claim, an employee's circumstantial evidence must be sufficient to raise a rational inference of discriminatory motive, which may not be met by weak statistical evidence when the employer provides a strong, plausible, and unrebutted showing of legitimate, nondiscriminatory reasons.
Facts:
- In 1971, Bechtel National, Inc. (BNI) hired John Guz. Over the next 22 years, Guz received steady promotions, raises, and favorable performance reviews.
- Bechtel maintained Personnel Policy 1101, which stated that employees had no guarantee of continuous service and could be terminated at Bechtel's option, but also outlined procedures for layoffs and for terminations due to unsatisfactory performance.
- In 1992, BNI's president, Robert Johnstone, became dissatisfied with the cost and performance of Guz's six-person work unit, the BNI Management Information Group (BNI-MI).
- In December 1992, Johnstone decided to eliminate the entire BNI-MI unit and transfer its functions to another existing unit, the San Francisco Regional Office Management Information Group (SFRO-MI), to reduce costs and improve performance.
- As a result of the reorganization, Guz, age 49, and three other BNI-MI members (ages 50, 45, and 44) were laid off.
- The two youngest members of BNI-MI, Christine Siu (age 34) and Robert Wraith (age 41), were transferred to SFRO-MI.
- While Guz was on a temporary "holding status," three positions opened up in SFRO-MI; two were filled by individuals younger than Guz (ages 38 and 42) and one by an individual older than Guz (age 52).
- The bulk of Guz's specific job duties were transferred to John Shaeffer, an existing SFRO-MI employee who was several months older than Guz.
Procedural Posture:
- John Guz sued Bechtel National, Inc., in a state trial court.
- Guz's complaint alleged causes of action for breach of an implied employment contract, breach of the covenant of good faith and fair dealing, and age discrimination.
- After discovery, Bechtel filed a motion for summary judgment.
- The trial court granted Bechtel's motion and dismissed the entire action.
- Guz, as appellant, appealed to the California Court of Appeal.
- In a split decision, the Court of Appeal reversed the summary judgment, finding triable issues of fact on all claims.
- Bechtel, as petitioner, sought review from the Supreme Court of California, which was granted.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is an employer entitled to summary judgment on an employee's wrongful discharge suit alleging (1) breach of an implied-in-fact contract to be terminated only for good cause, (2) breach of the implied covenant of good faith and fair dealing, and (3) age discrimination, when the employer eliminated the employee's entire work unit as part of a corporate reorganization?
Opinions:
Majority - Baxter, J.
Yes. An employer is entitled to summary judgment under these circumstances. First, for the implied contract claim, an employee's longevity and positive reviews alone do not create an implied contract right against termination at will; any such contractual rights are limited to the specific terms of an employer's written personnel policies. Here, Bechtel's policies did not restrict its right to eliminate an entire work unit for economic or performance-related reasons, even if those same policies provided for progressive discipline for individual poor performers. Second, the implied covenant of good faith and fair dealing cannot create substantive limits on termination beyond those agreed to in the contract. If the employment is at-will, the covenant cannot prohibit termination; if a contract term is breached, the covenant claim is superfluous as the remedy is for breach of contract. Third, for the age discrimination claim, Bechtel presented strong, credible, and largely undisputed evidence of legitimate, nondiscriminatory reasons for its actions—a bona fide reorganization to cut costs and improve efficiency. Guz's circumstantial evidence, consisting primarily of weak statistical comparisons from a small employee pool, was insufficient to create a rational inference that Bechtel's true motive was discriminatory animus.
Concurring - Mosk, J.
Yes. This case fits into the narrow class of cases described in Reeves v. Sanderson Plumbing Products, Inc. where, despite a weak prima facie case and some evidence of pretext, no rational factfinder could conclude the action was discriminatory due to the employee's concessions and the employer's strong showing. However, although Bechtel had a nondiscriminatory reason for the termination, that does not resolve the separate contractual question, left for the Court of Appeal on remand, of whether Bechtel complied with its own layoff policies and what would have happened if it had.
Concurring - Chin, J.
Yes. The court correctly granted summary judgment, but an additional reason is that Guz failed to produce any credible evidence to establish a prima facie case of age discrimination. After extensive discovery, Guz offered no meaningful statistical evidence, no comments suggesting age bias, and no other circumstances suggesting a discriminatory motive. The small statistical sample of six employees is unreliable, and the fact that Guz's own duties were assumed by an older employee contradicts any inference of age-based animus. A defendant meets its summary judgment burden by showing that a plaintiff, after a full opportunity for discovery, cannot establish a prima facie case.
Concurring-in-part-and-dissenting-in-part - Kennard, J.
No, as to the age discrimination claim. Guz presented sufficient evidence to create a triable issue of material fact regarding age discrimination, making summary judgment improper for that cause of action. Guz established a prima facie case by showing he was over 40, performed his job well, and was passed over in favor of younger workers. He also presented substantial evidence that Bechtel's stated reasons for his termination—cost savings and a downturn in workload—were pretextual. Under the standard set in Reeves v. Sanderson Plumbing Products, Inc., a plaintiff's prima facie case combined with sufficient evidence to find the employer's justification is false is enough to survive summary judgment and let a jury decide the ultimate question of intentional discrimination. The majority errs by weighing this evidence and concluding no rational factfinder could find discrimination. This is a question that should be resolved by a jury at trial, not by a court on summary judgment. (This opinion concurs with the majority's resolution of the contract and implied covenant claims).
Analysis:
This case significantly clarifies the landscape of wrongful termination law in California, particularly at the summary judgment stage. It reinforces that the implied covenant of good faith and fair dealing is not a standalone source of substantive employment rights but is tied directly to the express or implied-in-fact terms of the employment contract. The decision also narrows the scope of implied-in-fact contracts based on longevity, holding that such claims must be tethered to specific, written employer policies rather than general circumstances. For discrimination claims, the ruling empowers defendants on summary judgment by affirming that a weak prima facie case can be defeated by a strong, credible showing of nondiscriminatory reasons, requiring plaintiffs to produce substantial evidence of pretext to proceed to trial.
Unlock the full brief for Guz v. Bechtel National, Inc.